Business owners: COVID-19 and your employees

Workplace Relations 20 March 2020

The rapid spread of COVID-19 or “coronavirus” is impacting our community in many ways. Much attention has rightfully been focused on vulnerable Australian workers (particularly low paid or casual workers) and how the Government and the community are continuing to support them to pay their rent, their mortgage, and put food on the table.

At the same time, Coulter Roache has received numerous enquiries from business owners facing precisely the same dilemmas as their valued workers, concerned that making the wrong decision could result in legal liability.

The Federal and Victorian governments’ direction to employers are currently:

  • If a worker has returned from overseas, they should be directed to stay at home for a period of at least 14 days or until medical clearance is received;
  • If any worker is displaying cold and flu like symptoms they should be directed to stay home until a medical clearance is received.
  • Flexible working arrangements including working from home should be implemented.

Are employers obligated to pay workers for such absences, and if so, how should such payments be characterised?

For example, if a worker returns from overseas and is in good health, time spent away from the workplace pursuant to the government ‘self-isolation’ direction would not ordinarily be characterised as sick leave.

Likewise, a worker may display symptoms of an illness that would normally mean they were fit to work.   In such circumstances, is it right for an employer to automatically characterise such an absence as sick leave?

Often employers can afford to pay employees for the type of absences described above.  Not every business can afford to be that generous.

What is the answer?

Whether or not an employer must pay employees or has the option to withhold or even reduce payments to employees for coronavirus related absences requires a precise analysis of:

  • The type of workplace and the services/products provided; and
  • The circumstances under which an employer directs an employee or employees to stay home.

Although the drafters of the Fair Work Act 2009 (Cth) did not anticipate a situation such as a pandemic, there are provisions and procedures which expressly outline the rights and obligations of parties to an employment relationship that can be adapted to these circumstances. 

Section 524(1) of the Fair Work Act provides that an employer may stand down an employee during a period in which the employee cannot usefully be employed because of a number of circumstances including: 

  • industrial action (other than industrial action organised or engaged in by the employer)
  • a breakdown of machinery or equipment, if the employer cannot reasonably be held responsible for the breakdown, or
  • a stoppage of work for any cause for which the employer cannot reasonably be held responsible.

If an employer stands down an employee during a period in accordance with s.524, it is not required to make payments to the employee for that period.

Section 524 is intended to relieve an employer of the obligation to pay wages to employees who cannot be usefully employed in certain limited circumstances that may include the predicament all employers are currently facing.  Obviously, whether an employee can be usefully employed has to be determined having regard to the circumstances that face the employer and that employee.

Complicating matters further, the Federal Government looks likely to follow the lead of other nations and impose limits on gatherings of 10 people or more or even direct a complete lock down of society.  In such circumstances, many employers would have no choice but shut their doors and send their workers home.

If you are facing questions of whether or not to pay workers (for any reason) during this crisis give Coulter Roache a call for targeted industrial relations advice.

Please note that this advice was current at the time of publication – 4:45pm, Friday 20 March 2020.

Please contact us to ensure that this advice is still current, as this situation is changing constantly.

Contact Us

Contact Form or call us on 03 5273 5273

Liability Limited by a scheme approved under Professional Standards Legislation